INSTANT VIEW: Private sector sheds jobs in November

NEW YORK (Reuters) - Private employers cut 250,000 jobs in November, the most in seven years, a report by a private employment service said on Wednesday.

U.S. non-farm productivity was slightly stronger than initially forecast in the third quarter, but the pace of growth remained the slowest this year as output saw its biggest decline in seven years, the Labor Department said on Wednesday.

KEY POINTS: * ADP Employer Services also said it revised the number of jobs cut in October to 179,000 from the originally reported loss of 157,000. * Economists had expected the ADP report to show 200,000 private-sector jobs were lost in November, according to the median of forecasts in a Reuters poll. The 24 forecasts ranged from a drop of 350,000 to a decline of 175,000.

COMMENTS:

JONATHAN BASILE, ECONOMIST, CREDIT SUISSE, NEW YORK:

PRODUCTIVITY: "The bottom line is that this is more constructive on inflation. There is less upward pressure in the labor market. Employers are very cost conscious right now. They are managing costs aggressively. This shouldn't be worrisome for inflation for some time.

"As we continue to get indications that core inflation is easing and growth is going to be very weak for a long time, the yield curve is going to flatten. And a flat yield curve tells us inflation is not a problem whatsoever and the Fed is going to keep rates low for an extended period of time."

ADP: "It's been a good guide in the direction for private payrolls but it's been progressively worse. It reinforces our expectations for payrolls is a decline of 350,000, The last time we saw that kind of monthly job loss was May 1980."

NIGEL GAULT, CHIEF U.S. ECONOMIST, GLOBAL INSIGHT, LEXINGTON,

MASSACHUSETTS:

"I think what it says is that maybe the consensus was a little optimistic on the jobs decline we're going to get on Friday. We're looking for a decline of 370,000. Given ADP's track record of being a bit optimistic, maybe 370 isn't a bad number now.

"The thing to take away is that ADP said last month it was minus 179,000 and ADP is saying this month it's now minus 250,000. So, just in terms where it's consistently too low on the job losses, they're telling a story that it got a lot of worse in November. That's the main thing to take away from it.

"I'm hoping that the next couple of months are going to prove the worst months for job loss. I think they're going to be bad, I'm hoping they will be the worst. Obviously we're going to be losing jobs for most of 2009 as well. But in terms of the rate of decline, we're going to be seeing a miss that we haven't seen for a long, long time."

KURT KARL, CHIEF US ECONOMIST, SWISS RE, NEW YORK:

"The ADP report is a volatile gauge but the headline figure of 250,000 seems consistent with deep economic recession and that's where we are at this point. The government report on Friday is probably going to show a similar figure, perhaps even higher, around 300,000. That number seems to be the consensus. Still, if the figures come in worse than that, at around 500,000, it will be scary. The markets will react to it."

CRAIG PECKHAM, EQUITY TRADING STRATEGIST, JEFFERIES & CO, NEW

YORK:

"Well, naturally the loss is consistent with an economy that is slowing and shedding jobs. However, it does look better than the November government data. That said, for whatever reason, the ADP numbers have consistently been more optimistic on overall employment trends. That's been the case throughout the recession. So I think the ADP numbers need to be taken with a grain of salt.

"We have a barrage of economic data coming at us today, and for the next few days. More important may be the ISM non-manufacturing data report."

ROBERT MACINTOSH, CHIEF ECONOMIST, EATON VANCE CORP, BOSTON:

"It is worse than expected, but the report has been lagging the non-farm payment report, which I think most people would say is the better report. The ADP catching up to non-farm payrolls.

"This certainly doesn't help the stock market. The main reaction will come from the non-farm payrolls report on Friday.

"All things being equal, this may help Treasuries a bit. Most people are going to wait until Friday."

LOU BRIEN, MARKET STRATEGIST, DRW TRADING GROUP, CHICAGO:

"The ADP has been off pretty considerably in most months. It is showing the direction (of the labor market), but is not necessarily accurate as a guide to payrolls. This is the private sector and one of the better components to the jobs number has been the government. Treasuries are taking it with a grain of salt."

MARKET REACTION: STOCKS: U.S. equity index futures add to losses BONDS: U.S. Treasury debt prices slightly extend losses DOLLAR: Dollar holds losses against the yen

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